Unit 3 covers important information about state and federal taxes, including: - The IRS and state departments of revenue collect taxes to fund government programs. - Earned income comes from employment while unearned income includes benefits. - Forms W-4 and W-2 relate to tax withholding and reporting of wages. - Dependents and filing statuses impact tax returns, which are due April 15 each year.

1. Unit 3 – State and
Federal Taxes
OCS FINANCIAL MANAGEMENT - NCVPS

2. Unit 3 – State and Federal Taxes Is FULL of Great Information!
• Why is it important that people pay their taxes?
• What Agencies collect taxes?
• What is the difference between Earned and Unearned Income?
• What is a form W-4 and what is it used for?
• What is a Dependent?
• What is a form W-2 and what is it used for?
• What form can be used by many taxpayers to file their Federal Income Tax?
• What form is used to file a NC State Income Tax return?
• What is the Due Date to file Income Tax returns each year and how do I get
help filing my return?

3. What is the Due Date to file Income Tax returns each year and how do I get help filing
my return?
April 15th is the due date for filing both the state and federal income tax return for
every taxpayer. If there is some reason the return cannot be filed on time, an
EXTENSION can be applied for. But the Extension must be filed by April 15th.
The IRS has a list of tax preparation assistance programs that people can access.
They also provide a free electronic filing (e-filing) program for certain individuals
who have income less than $62,000.

5. Why is it important that people pay their taxes?
Federal,
State, and
Local tax
funds are
used to
pay for
many
programs.

6. What Agencies collect taxes?
Federal Income Tax (paid to the
United States Government) is
collected by the Internal Revenue
Service (IRS).
Image available for reuse through Creative Commons, CCO Public Domain
NC State Income Tax is collected by
the North Carolina Department of
Revenue (NCDOR).
Public Domain Image, NC Department of Revenue
Local Counties/Cities collect Sales
Tax, Hotel Taxes, Gas Taxes, and
Real Estate Taxes. Each County/City
has their own department that is
responsible for this collection.

7. What is the difference between Earned and Unearned Income?
Earned Income is money that a
taxpayer EARNS at their job.
Licensed for reuse – Creative Commons
Unearned Income is money that a
taxpayer receives from other
sources such as: Social Security
Benefits, Disability Insurance
Reimbursements, Child Support,
and others.
DonkeyHotey, Social Security Card Illustration, licensed CCO Attribution. International Symbol of
Access, Public Domain. www.pixabay.com, licensed CCO, Public Domain

8. What is a W-4 form?
This form is completed by
an employee.
It shows the allowances
claimed by the employee.
The employer will use this
to determine how much
federal and state tax is
deducted from each pay
check.

9. What is a Dependent?
In tax terminology – A Dependent is someone that can be claimed on another
person’s tax return. In most cases, this is a child of a parent. But sometimes older
parents can be claimed on their children’s tax return as well. The dependent has over
50% of their expenses paid for by the claiming person.
Image Source www.pixabay.com, licensed CCO Public Domain

10. What is a form W-2 and what is it used for?
Image from W2 form on the www.irs.gov site, Public Domain
A W-2 Wage and Tax Statement is
provided by the Employer to the
Employee. It is an official statement
of the amount that Employee
earned the previous year.
It lists the amount earned and the
state and federal income tax that
was withheld from all paychecks in
the previous year.
The employee uses this information
to complete their Income Tax
Returns.

11. Finding Information on a W-2 Form

12. What form can be used by many taxpayers to file their Federal Income Tax?
Single Taxpayers with no dependents
who earn less than $100,000 in a year
can use the 1040EZ form.
EZ stands for “Easy”.
It is a less complicated version of the
1040 form.
Images taken from forms available in the Public Domain on www.irs.gov

13. What form is used to file a NC State Income Tax return?
Image taken from form available online through NC DOR, http://www.dor.state.nc.us/downloads/fillin/D400_webfill.pdf
NC State Income Tax
returns are completed on
the form D-400.
There is no “EZ” version
of this state form.
Information from your
1040 EZ will be used to
complete the D-400.